It’s time for this week’s top stories cheat sheet.
Canadian real estate
Canada’s real estate boom is over, $1.6 trillion loss expected: RBC
Property prices in Canada have skyrocketed over the past few years, giving a boost to wealth. But now that it’s past its peak, RBC sees housing reclaiming wealth. Banknote households saw their biggest drop on record in the second quarter of 2022 as he lost $900 billion. By the end of this cycle, they expect households to lose $1.9 trillion from their peak.
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Global real estate downturn could kill growth, Canada most vulnerable: Ox Econ
Canada is one of the most vulnerable economies in the coming recession. Its reliance on housing investment as a share of the economy makes it more susceptible to shocks. Few countries allow developed countries to be so heavily dependent on housing that they derive one in every ten dollars of GDP from housing. Not Canada. High interest rates make it more vulnerable than any other developed country.
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Bank of Canada should disclose inflation index data it uses: BMO
The Bank of Canada used ambiguous data points to justify its decision this week. There was just one problem. This critical inflation point is not typical. BMO Capital Markets requests central banks to publish this data on a regular basis. Despite being presented as usual, BMO economists were unable to reproduce the unprecedented data. Banks argue that if the market is to act on this indicator, it should be released on a regular basis.
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Bank of Canada rate hike just 0.5 points, economy not strong enough
Canada’s central bank surprised the market with a smaller-than-expected hike in the overnight rate. The Bank of Canada (BoC) hiked interest rates by 50 basis points, a third below market expectations. GDP forecasts were cut in half as interest rate hikes tapered and inflation recovered faster. In other words, the economic slowdown is expected to curb excess demand.
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